SOUTH AFRICAN ESTIMATE

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP89T01156R000100090024-8
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 6
• Document Creation Date: December 23, 2016
• Document Release Date: July 6, 2011
• Sequence Number: 24
• Publication Date: September 3, 1985
• Content Type: MEMO

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SE:ET
DDI #03672-85
3 September 1985
MEMORANDUM FOR: Director of Central Intelligence
FROM Deputy Director for Intelligence
UJECT South African Estimate
1. Just between us, I'm not very happy with the way the
South African estimate came out. It seems to me that we
essentially ask only one question -- whether or not the South
African regime will survive -- and then offer an equivocal
answer. We say they have the resources necessary to survive but
then kind of throw up our hands and say that there are a lot of
unpredictable external and internal forces that could lead to
collapse of the regime. Although that is a bit of an unfair
oversimplification, it is still essentially the bottom line of
2. It seems to me that the way we should be addressing this
issue at this point is to begin with an assumption that few
experts now would quarrel with: because of the events of the
last year or so, South Africa has been changed in fundamental
ways.
-- The assumptions and perceptions of whites, blacks, the
business community, the politicians and the
international community have all changed.
3. If one acknowledges that a real change in
assumptions/perceptions has taken place in and about South
Africa, the important questions then are how much has changed and
what kind of future is in prospect in light of these undisputed
changes. The Economist, in the attached very interesting
article, postulates two scenarios -- degenerative collapse and a
state of siege. I think our people and virtually everyone who
coordinated the estimate would say that a state of siege is the
more likely outcome. I would ask, however, whether a state of
siege in a country of South Africa's size and composition can be
stable or is a state of siege simply a way station on the way to
more dramatic change.
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SECRET
4. I am struck by how adamant analysts throughout the
Community are in their view of the likely survival of the white
regime. But the real, operational question for the United States
perhaps is not whether the white regime will survive but what
kind of regime will it be, how strong it will be, its economic
prospects, what its relationships with the outside world will be,
the degree of internal violence (civil war?), opportunities for
external meddling, the implications for South Africa's regional
security role and so forth. A South Africa in a state of siege
or totally preoccupied with internal economic and political
difficulties has very real impact on our interests in Southern
Africa. Thus, I think we have taken too superficial a cut at
this problem in the estimate and I plan to ask John Helgerson to
have his people think more in the terms described above.
Robert W. Gates
Deputy Director for Intelligence
Attachment:
As Stated
2
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DDI #03672-85
3 September 1985
DDI/RMGates/de/[
DISTRIBUTION:
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1 - DDI Chrono
1 - NIC Chrono
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copyright
second, that the possibility of legally requiring diversi-
fied accountancy firms to draw a strict dividing line
(what City folk call a Chinese wall) between the audit
and non-audit work is fully examined.
It is not only those who have issued writs who criticise
accountants for failing to signal mismanagement and
fraud. Yet accountants swear they are doing what they
have always done. Is the chasm between how accoun-
tants and the public see auditing becoming too wide to
bridge? Accountants are anxious that it should not be.
The Institute of Chartered Accountants has hurried out
the report of a working party chaired by Mr Ian Hay
Davison, the chief executive of Lloyd's and a former
head of the profession's accounting standards commit-
tee, on the role of the auditor in detecting and reporting
fraud. The report is perceptive as far as it goes, but does
not go far enough.
It acknowledges that the auditor has some responsi-
bility in reporting fraud but echoes a nineteenth-
century court judgment that he is a watchdog, not a
bloodhound. The committee says it is employers who
should be obliged to report fraud to the public authori-
ties; accountants need only be encouraged to do so.
True, an auditor's main duty is to alert a company's
directors and through them its shareholders. What
happens, though, if the employer or directors them-
selves are the crooks? At present, few fraud squad
investigations are sparked by auditors, who are wary of
breaching a client's confidence and risking defamation
suits. Encouragement may not be enough to stir them,
particularly now that accountancy firms want to win
much more than auditing contracts from their clients.
So many irons in the fire
With their diversification into management consultan-
cy, tax work, executive recruitment and so on, less than
half of the revenue of the big eight accountancy firms
comes from the static and highly competitive audit side
where profit margins are thin. Accountants, of course,
deny that they are in consequence producing audits
with less care than before or that there is any conflict of
interest. It is a sincere rejoinder. The fact remains that,
to outward appearances at least, accountancy firms
have a growing financial temptation to be a bit more
permissive on the audit so as not to lose a consultancy
or tax contract.
Appearances are important and the appearance of a
conflict of interest will grow if continued diversification
and growth reduce the share of auditing revenues
further. By spinning off their auditing practices from
their non-audit work accountancy firms would reassure
investors. Doing this will not be easy. It will reduce
some of the efficiency joint audit and advice can bring.
It is still probably a price worth paying to restore
confidence in the independence and competence of the
audit. Especially if accountancy firms are allowed to
become limited liability companies and partners are no
longer liable down to their last bottle of scotch.
SCENARIOS FOR SOUTH AFRICA
What future for South Africa? President P. W. Botha, his head ringing with the din of black riots, has put for-
ward yet another batch of reforms. His hope is for gradual black advancement, eventually under a pluralist
confederation of variegated mini-states-the presumption being that whites will always control the centre of
power. His chances of success at present seem slim. Most outsiders prefer to expect South Africa to
experience normal post-colonialism: growing violence, a collapse of white will to rule, black majority rule and
one-party oligarchy. Marxists see a more drawn-out process: a new black bourgeoisie becomes the
breeding ground for sometime revolution against white capitalism. Yet there are other, more plausible,
options. We examine two of them. The first, Degenerative Collapse, would be tragic and unstable. The
second, State of Siege, is unpleasant but could be sustainable and might lead to something better.
Degenerative
Collapse
On the first model, the South African
government fails to contain the present
unrest. Moderate black leaders are un-
able to hold back the hotheads. Every
dispute, however minor, turns violent.
Economic depression and unemployment
lead to disorder in the East Cape car and
consumer durables industries and in
Transvaal mining and manufacturing.
Frightened whites begin to sack their
servants. With the relaxation of the pass
laws controlling movement between
homelands and industrial towns, real
wages fall. This sharpens friction between
16 "insider" blacks-those who have al-
ready carved out niches in the white
system-and nothing-to-lose newcomers.
There are explosive movements of the
population. Thousands of families leave
the homelands to join adults scouring the
country for work, adding to 1.5m-plus
illegal immigrants. Shanty towns, flooded
with migrants, spring up menacingly
round every centre of white prosperity.
The population of the Johannesburg re-
gion soars from 2.5m towards the 12m of
Sao Paulo or Mexico City.
Existing patterns of black leadership
break under the strain. The United Dem-
ocratic Front (UDF) can no longer co-
otdinate protest or contain the violence.
Its conflict with the more militant black
consciousness group. Azapo, worsens.
III-will between all other black politicians
and Chief Gatsha Buthelezi's Zulu-based
Inkatha movement slides into guerrilla
warfare. Soweto becomes a regular bat-
tlefield for inter-tribal riot and murder.
Durban and Mr Buthelezi's adjacent
homeland of KwaZulu are wracked by
gang warfare between Zulus and other
black groups.
The banned African National Con-
gress. its headquarters in Lusaka, tries to
take over the self-combusting unrest. The
ANC is itself taken over by Moscow-
trained militants, eager to direct the ter-
ror against a wider range of targets. City
centres and white suburban shopping cen-
tres come under attack, as do white
farms. The UDF splits, with church
groups and trade unionists trying, to draw
back from the violence and then being
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attacked as traitors.
The most important factor in Degener-
ative Collapse is the white response. The
spread of violence puts the police and the
army under political as well as operation-
al strain. Black policemen, recruited in
ever greater numbers, become unreliable
in patrolling the townships-even when
men from "foreign" tribes are imported
to do the job. Regular units of the South
African Defence Force, made up of white
conscripts. are ordered to take up the
cudgels of repression, which further de-
moralises the police force. White police-
men turn agents provocateurs in collusion
with ultra-right vigilantes.
South Africa's black townships are de-
signed for ease of policing. The end of
influx control weakens this as white areas
become pockmarked with shanties. Mass
poverty, once tucked away in the home-
lands, is imported to white doorsteps`,
The shanties become no-go areas. Black
councillors and officials either flee to safe
compounds or join the rebels. Govern-
ment authority collapses and local black
leaders fill the power vacuum, aided by
control of the liquor monopolies, vigilan-
te bands and protection rackets. A new,
reckless black leadership arises which
lacks the will and the authority to negoti-
ate political reform with the government.
A shift to the right
The progressive restriction of the areas of
central control undermines confidence in
white government. The white electorate
shifts rightwards: some Afrikaners are
ready for compromise, but they are
steadily outnumbered by a combination
of English- and Portuguese-speakers,
many of them first-generation refugees
from Rhodesia, Angola apd Mozambique
desperate to defend their new status.
Support for candidates of the Conser-
vative party and other extreme right-wing
parties (roughly 15% in 1985) grows rap-
idly. Every National party member of
parliament feels that his seat is threat-
ened. President Botha responds by a
continued state of emergency, by condon-
ing police excesses, by fierce restrictions
of civil liberties and by a general repres-
sion of black and white dissent. Detention
without trial soars. The once relatively
independent judiciary is shackled.
By this stage, apartheid has taken on a
more oppressive but less overtly racist
character. Pass laws are scrapped com-
pletely, together with most of petty apart-
heid and the government's previous re-
striction of black citizenship to homeland
areas. But white housing areas, hospitals
and schools are closely guarded: they
often look like fortified compounds. Each
budget still allots less to black services
than to white.
On the economic front, the govern-
ment retreats from the relative liberalisa-
tion of the 1970s and moves towards
greater state control. Investment falls not
so much because of foreign sanctions as
because white South African managers
increasingly look only to the short term.
Wage and price controls become tougher.
The export of private-sector dividends is
stopped and import controls introduced.
Political pressure increases public spend-
ing on law and order and on containing,
though not reversing, black urbanisation.
Budget discipline collapses. Large deficits
and rampant inflation result.
In time. the increase in lawlessness and
the decline in morale among whites feed
on each other. White emigration acceler-
ates, house prices plummet and white
suburbanites see blacks camping in neigh-
bouring fields and on the verges of their
streets. Soon they squat in houses vacated
by fleeing whites. The pressure of num-
bers overwhelms the whites as their
schools, hospitals, social services are tak-
en over by blacks.
Local power broking between the
white authorities and local black leaders
becomes frenetic. Civilian ministers are
shorn of authority, which passes to the
military members of the state security
council and provincial commanders. The
Zulu leadership in Natal presents the
provincial authorities with an ultimatum
on a tripartite administration, as fore-
shadowed in the 1983 Buthelezi commis-
sion report. Protection is offered to white
and Indian areas, but only in return for a
transfer of provincial power in Natal to a
Zulu-dominated cabinet. The govern-
ment in Pretoria is powerless to stop such
a deal, since it cannot transfer troops
from other regions. Lawlessness in Natal
none the less continues as Zulu factions
battle for supremacy.
This has a knock-on effect in other
provinces. Widespread unrest in the East-
ern Cape leads to mass migration of
whites towards Cape Town. Port Eliza-
beth falls to black leaders in bitter conten-
tion with Coloured (mixed-race) groups.
Cape Town whites and Coloureds join
forces to resist any encroachment towards
the peninsula of black squatters swarming
across the Cape Flats. They reach local
deals beyond the authority of Pretoria.
There is talk of partition, with the Cape
as the "last laager".
Transvaal and the Orange Free State,
heartlands of Mr Botha's Afrikaners, re-
main intransigent, plunged in a long ter-
rorist civil war. A string of concessions by
the security authorities cannot restrain
undisciplined bands of blacks, who peri-
odically loot white shopping centres and
sabotage office blocks, factories and pub-
lic utilities.
The degeneration into anarchy is slow
but inevitable. Pretoria, at first con-
strained by militant, right-wing white
opinion, suspends all democratic forms
rather than concede the demand for a
universal national franchise. Eventually,
the state security council takes on the
character of a committee of national
security, disregarding white ministers but
negotiating with Coloured and black
leaders according to their ability to com-
mand allegiance in the townships. Whites
find themselves weaker as blacks are
invited, ever more desperately. to help
re-establish public order. Civil rights are
not restored but are further eroded as co-
opted blacks struggle to hold their posi-
tions against rivals. The regime proves
highly unstable, vulnerable to military
coup and counter-coup, often in collusion
with black guerrilla leaders.
South Africa, it might be said, becomes
no different from a dozen other modern
African countries.
State of Siege
No plausible model offers peace, freedom
and plenty in South Africa. Our second,
slightly more optimistic, model contains
many features of the first. It assumes
continued endemic unrest in the town-
ships. The relaxation of influx control
leads to swift urbanisation, and with it a
breakdown in the authority of the pre-
sent, relatively responsible, black leader- 17
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SOUTH AFRICA
ship. Factionalism and tribalism increase.
Sanctions and international ostracism are
imposed with growing severity, though
their effects are patchy.
The difference between Degenerative
Collapse and State of Siege lies in the
extent to which the white authorities can
turn the not-quite-apocalyptic second op-
tion to their own advantage. In State of
Siege the reforms which are put forward
by President Botha in this August of 1985
succeed at least in sustaining a centrist
white consensus.
Though the far right is reinforced in its
opposition, white Progressives and en-
lightened Afrikaners find enough com-
mon cause to maintain a rough consent
for the policies of the "gradualist" wing of
the National party. Links are strength-
ened with Coloured and Indian politi-
cians. South Africa's political establish-
ment does not put up the shutters and
turn in on itself. At first it remains open
to debate and policy innovation. Some
blacks are persuaded, or bribed, to co-
operate in the President's Council and in
other consultative institutions. Hope is
kept one step ahead of disillusion.
Drawing strength from such support,
Mr Botha takes greater risks with his
National party caucuses. He continues to
stage highly-publicised clamp-downs, ar-
rests and bannings to monitor and disrupt
the black leadership and sustain white
morale. But he keeps the police on a tight
rein. eventually bringing in a tough but
pragmatic army general as head of inter-
nal security. Better recruitment and train-
ing help to ensure that an increasingly
non-white security force can be main-
tained in all but the worst trouble spots.
In 1985, South Africa has been spending a
smaller proportion of its gnp on defence
(4%) than almost any other African coun-
try. In 1986-90, it finds itself affording
much more.
No great disorder
On this model, black groups remain so
infiltrated that they find it hard to stage
nationwide or co-ordinated protests.
Strikes prove relatively easy to break,
aided by the sudden labour influx to the
towns. Terrorism becomes more wide-
spread, yet is curtailed by the restraint
which continues to infuse South African
black leaders and by the ease with which
the security forces nearly always manage
to monitor it.
Meanwhile, little quarter is shown to
non-violent dissent. Press censorship is
extended. Cultural and intellectual life is
anaesthetised. Foreign correspondents
are regularly expelled and little concern is
shown for high rates df English-speaking
emigration. Liberal white South Afri-
cans, trapped in their tacit or open alli-
18 ance with the Nationalists, protest at the
regime's illiberalism but to no avail. The
government rather welcomes foreign pro-
test as a foil against its right-wing critics at
home.
The appearance of a nation under siege
disturbs white businessmen, whose recent
courting by Mr Botha proves short-lived.
As in the previous model, the govern-
ment responds with a package of protec-
tionist and interventionist measures.
However, as long as the authorities can
show that they are able to contain public
disorder, confidence is not seriously un-
dermined. Mineral exports to America,
Europe and Japan remain buoyant. Food
shipments to the ever shambolic econo-
mies of the rest of southern Africa actual-
ly increase. South Africa's growing insu-
lation from world finance is welcomed by
many Afrikaners because it reduces their-
reliance on imported capital and talent.
Since only a tiny fraction (less than 5%)
of new fixed investment is foreign-owned,
industrial growth . is not drastically
reduced.
All this has a beneficial protectionist
effect in the short run-the only period
TRANVAAL
Pr.tcria
that survival governments care about.
The reserve bank and the finance ministry
find it easier to discipline the economy
and control cabinet overspending (except
on defence). Entrepot markets develop
through Swaziland and other neighbour-
ing black states, binding them more close-
ly to South Africa. These states are used
by South Africa as surrogates. It barters
with them for security, trade and interna-
tional recognition. The siege economy
extends to all of southern Africa.
The stability of the State of Siege
model depends on the balancing abilities
of the white leadership. The policy re-
quires carrots as well as sticks, yet the
carrots are not allowed to be so appetising
as to endanger white control. Already the
Botha government has co-opted Col-
oured and Indian leaders. Some time in
1986-90, it makes concessions to Mr
Buthelezi, leader of the largest black
group, the 6m Zulus: not full political
rights but territorial grants, lucrative
franchises, local autonomy.
As in the first model, the framework of
classical apartheid withers away: the
homelands policy, the sex laws, influx
control. De facto segregation remains
(now called "planning control") to try to
keep blacks out of white districts, schools
and hospitals. In the State of Siege mod-
el, this withering of apartheid is a useful
counter to black militancy. It entices an
increasing number of "system blacks"
into tacit collaboration. even though they
occasionally have their smart houses fire-
bombed.
Fewer votes, not more
The government's most difficult problem
is how to grant all these concessions
without bowing to the ultimate black
demand of one man, one vote. So. rather
than extend national voting rights to
blacks, it steadily qualifies such rights for
whites. Pressure mounts on the president
to postpone the next general election
(due in 1989). The parliament, to which a
partly boycotted black chamber is added,
declines into insignificance. The govern-
ment proposes that all groups should
exercise their democratic rights within
their own areas. A forceful policy of local
autonomy is pursued, with local councils,
some even multiracial, enjoying lucrative
indirect tax powers.
Homeland, regional and local authori-
ties are asked to send locally-elected
representatives to a new confederal par-
liament, presented to the world as the
acceptable face of multiracialism. Like
most South African constitutional re-
forms, it half-works. The presidential
succession is decided by a cabal on the
basis of a confederal electoral college, on
which whites. Coloureds, Indians and
blacks are all represented. This confeder-
alism is so organised that whites keep
their hands on the important levers of
power through the mostly-military state
security council and its bureaucracy. This
would remain the case, even were a
compliant black one day to be "elected"
as state president.
Under the State of Siege model. South
Africa's political life, after a bout of
innovation, becomes once again intro-
verted. Government is based on contin-
ued military strength, on the containment
of dissent and on ad hoc power-broking
with local councils and interest groups,
including black ones. The white elite
continues in central command, but with
constant judicious co-optation.
For 300 years. Afrikaners have clung to
their African foothold by such pragma-
tism. A State of Siege regime may prove
more authoritarian than classical apart-
heid. It would also be less dogmatic. Like
our first model, it would be far from
unique; but it could be more acceptable
to the outside world. Authoritarian re-
gimes are unpleasant. They are not ostra-
cised for being. so, and can continue in
power for a long time.
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